Canada's Flaherty backs IMF bank oversight role

Thu Feb 12, 2009 6:15pm EST
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OTTAWA (Reuters) - Canadian Finance Minister Jim Flaherty said on Thursday that Ottawa favors using the Financial Stability Forum and International Monetary Fund to oversee international bank regulation rather than creating a new watchdog for that role.

"In the middle of an economic crisis, synchronized global recession, a crisis in some of the financial systems of the world, this is not the time to create new global entities, which would take months to get up and running, if not years," Flaherty told reporters.

Flaherty, who will fly to Rome later on Thursday for a meeting of finance minister from the Group of Seven leading industrialized nations, repeated his call for so-called toxic assets to be cleared out of the world financial system.

"Government is the only source now of going in and dealing with these bad assets in the banks and segregating them ... Every country has to get its own financial system in order and its institutions in order and then we have to have some sort of verification," he later told the Canadian Broadcasting Corp.

"Our suggestion ... has been to use the IMF since they're already in that business and have experience, and we need that quickly," he said.

Flaherty later told CTV television that the G7 meeting in Rome could "start making some decisive steps that the G20 can follow from", but gave few details.

"Our G20 agreement was that all of us would create initiatives in our own jurisdictions," he told reporters, referring to November's G20 summit in Washington.

The finance minister also said the Washington's planned stimulus package would benefit Canada as well as the United States. Canada sends 75 percent of its exports to the United States and is being badly hurt by the slowdown there.

"The American plan ... is a strong package and good for the United States, good for Canada. We know that stimulus builds on stimulus."   Continued...